Oklahoma Pegs Yearly Tax Losses from Uninsured Drivers at $8.8M

A report from regulators in Oklahoma estimates that uninsured drivers cost the state $8.8 million a year in tax revenue.

“When people break the law, and don’t pay their fair share, it hurts all of us,” John D. Doak, commissioner for the Oklahoma Insurance Department (OID), said in a statement.

According to the department, the figure comes from Frank Stone, OID’s chief actuary, who studied transportation and coverage data showing that there are about 563,000 uninsured cars in the state and that the average annual cost of liability coverage is $700.

State Grappling with High Rate of Uninsured Drivers

Nationwide, Oklahoma has one of the highest rates of uninsured drivers with nearly 1 in every 4 drivers there lacking the coverage required to drive, according to 2009 data from the Insurance Research Council (IRC). That rate gives Oklahoma the fourth-highest uninsured rate in the U.S., which had an average uninsured rate of 13.8 percent that year.

According to the OID, public safety announcements and driver safety checkpoints are part of the department’s plan to combat the problem.

In a statement issued after the checkpoint, Doak said one motorist even told authorities that she “couldn’t remember the last time she had auto insurance.”

On a first offense, penalties for motorists found to be driving without a proper policy include towing of the car, license suspension and an additional $525 in fines and fees. There is also the possibility of a 30-day jail term.

The state is also one of 10 in the U.S. that enforces a “no pay, no play” insurance law barring uninsured drivers from collecting compensation for pain and suffering from a crash, even if they are not the at-fault party.

A recent IRC study showed that implementing such laws in a state prompts as much as a 1.6 percent reduction in the rate of uninsured drivers.

The OID also said that it will continue efforts to push proposals through the state Legislature, including a bill that would inflate fines for uninsured drivers.

Another bill, HB 2525, would have granted police wider use of the state’s insurance database by allowing them to instantly verify the coverage status of any car they believed lacked the proper policy to be on the road.

Because that bill stalled in the state House last May, police are still only allowed to confirm the insurance status of drivers involved in a crash or pulled over for another violation.

Department Says Tax Revenue Could Have Gone Elsewhere

The OID also offered a breakdown of which state coffers that $8.8 million could go toward instead, highlighting pension funds of public safety employees and the general revenue fund, which supports programs related to education and social services.

Those monies could mean $4.1 million for the general fund, with the rest going toward separate retirement funds for law enforcement officers and firefighters, according to Doak, who called them “sorely underfunded systems [that] could really use this money to make sure Oklahoma Heroes receive the retirements they deserve.”

About Ben Zitney

Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.